Though the PSU banking space has seen a sharp rally of nearly 20 percent in a short span, and the low-hanging fruits are gone, Angel One is still positive. In fact, Sameet Chavan, chief analyst of technicals and derivatives at Angel One, advises a buy-on-decline strategy for quality stocks within the PSU banking space.
In an interview to Moneycontrol, he says that looking at the broader time frame on the Nifty50, he will not be surprised to see the index breaking 18,000 soon to retest the record highs of 18,600.
The market is likely to clock the magical figure of 20,000 during this Samvat 2079 itself, he says. “Overall, the placement of the banking space is adding to the conviction level.”
What are the charts telling about PSU banks (as well as Nifty PSU Bank index), which have seen a significant run-up in the last few days? Are you bullish about this segment?
The last couple of weeks have been excellent for the entire PSU banking space and SBI is the clear leader. On the monthly time frame, this index has been trading at the highest levels in the last three years. Hence, the price structure looks extremely promising.
We reckon that this space is waking up from its long slumber. We are likely to see some higher levels in the weeks or months to come.
We maintain our positive stance on this basket. Since we have already witnessed a sharp rally of nearly 20 percent in such a short span, the low- hanging fruits are already gone. One must follow a buy-on-declines strategy for quality propositions within this space.
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Are the monthly and weekly charts giving confidence that the Nifty can cross its record high well before the end of the calendar year, and more than 20,000 by next Diwali?
We have been hopeful since the last couple of months and expect the market to recover from the lower levels. Our markets did move higher, very much on expected lines, and now we are within the touching distance of the 18,000-mark.
Looking at the broader time frame, we will not be surprised to see the Nifty surpassing this hurdle soon to retest the record highs of 18,600. As we move forward, we are likely to see fresh legs unfolding to clock the magical figure of 20,000 during this SAMVAT 2079. Overall, the placement of the banking space is adding to the conviction level. Once we see other heavyweights also participating, history will be in the making.
Do you think the Nifty Auto has taken a good support at the 12,300-12,400 area and will consolidate for some more time before taking a big jump?
The auto sector was one of the early movers after the initial days of the Russia-Ukraine war. It gave some splendid moves in March-September and clocked some splendid moves.
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Recently, it underwent a price as well as time correction. Now we expect it to find support around 12,300-12,400, which coincides with the sacrosanct zone of the 89-day EMA (exponential moving average). We can see some accumulation happening around it, and we expect the auto space to resume its higher degree uptrend soon.
Do you get the sense of the rupee weakening towards the 85-86 levels against the US dollar after looking at the monthly and weekly charts?
I am not a currency expert but if we look at the daily USD-INR chart, we can see the INR showing some strength around 83-83.50. The moment we see the sub-82 levels, the dollar is likely to witness some weakness against the rupee.
Are the charts telling you that the US dollar index will hit the 120 level in the coming months?
As of now, the consolidation phase is clearly visible in the 110-114.50 range. Till the time the higher band is not broken, we expect some resilience from the other major currencies against the dollar.
Only a breakdown below 110 would confirm the weakness in the US Dollar index, which is likely to benefit the equity markets across the globe.
Is the Nifty Pharma getting into a momentum, considering the monthly charts?
It would be too early to comment on this. The pharma index has been a laggard throughout this year and would require some solid trigger to come out of this challenging phase. However, looking at the daily and weekly charts, we can see some early signs of revival. However, considering its deceptive nature, it’s advisable to wait for some confirmation before jumping into any conclusion.
It has managed to stay slightly above the 200-day SMA (simple moving average) level in the last couple of weeks. Once we see it surpassing 13,400 on a closing basis, the pharma space is likely to find its mojo back.
Disclaimer: The views and tips by experts on Moneycontrol.com are their own and not those of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.
